Google has been pumping out research and speaking at industry trade shows trying to educate advertisers and agencies about the growing importance of mobile in the consumer path to purchase. One of the “best practices” advocated by Google, as well as those experienced with mobile paid search, is to separate PC and mobile campaigns.

However new data from Wordstream indicate this is only happening in about 5 percent of cases.

Wordstream founder and CTO Larry Kim looked at the company’s huge trove of data and determined that 55 percent of paid-search campaigns target mobile devices. Given that inclusion in mobile paid search results is Google’s default setting, Kim told me this means “Just under half of advertisers opt out of mobile search in their campaign settings.”

Call Extensions Not Used But Mobile Consumers Want to Call

Kim also said that “less than 5 percent” of advertisers use phone extensions in mobile search campaigns. He was unable to give me a specific figure for location extensions, however.

Consider that recently published Google-sponsored research found that one of the top two things that people want to be able to do after a mobile-commercial search or lookup is call a business. Thus the failure to utilize phone extensions is a missed opportunity.

Bad Mobile Experiences Harm Brands

According to that same study, negative mobile experiences with websites (and presumably paid-search landing pages) can not only result in lost sales but actively harm the perception of a brand and its reputation:

Speaking recently with Dave Schwartz of DataPop, he told me that “Mobile search campaigns need to be managed in a much different way than PC campaigns and even than tablets.” He said that keywords and ad creative must be treated differently — precisely the opposite of what’s happening now according to the Wordstream findings.

Marketers Not Valuing Mobile Clicks Properly

Part of the reason that CPCs were lower in Q3 for Google was some shifting of search volumes from PC to mobile. Here’s what Google said in its 10Q filing:

Mobile search queries and mobile commerce are growing dramatically around the world, and consumers are using multiple devices to access information. Over time these trends have resulted in changes in our product mix, including a significant increase in mobile search queries and a deceleration in the growth of desktop queries …

Also, the margins on advertising revenues from mobile devices and other newer advertising formats are generally lower than those from desktop computers and tablets. We expect this trend to continue in the near future and that it will continue to pressure our margins, particularly if we fail to realize the opportunities we anticipate with the transition to a dynamic multi-screen environment.

According to DataPop’s Schwartz, mobile CPCs are lower than on the PC because marketers are tracking the wrong things and operating under “a set of wrong assumptions about mobile behavior.”

Schwartz explains that “Fewer marketers can connect a transaction to a mobile click, so their [perceived] conversion rates are lower and they’re not willing to pay as much for mobile clicks.” Because most marketers are using the “same automated bid engine and economic evaluation,” according to Schwartz, “these [mobile] clicks appear to be worth less.”

Marketers Can’t Track Most Mobile Conversions

Take a look at the following data from Marin Software on mobile CTRs and conversions: clicks are higher but conversions (on smartphones) are quite a bit lower than on the PC. This is largely a function of the fact that a majority of smartphone owners don’t engage in e-commerce on their mobile devices. Instead they convert offline or later on a PC, which are generally not tracked.

The upshot of all this is that consumers increasingly rely on smartphones for shopping and product research before purchasing. However marketers are not correctly or adequately responding to that consumer behavior. Indeed, most of them are probably not even aware of the extent to which they’re missing the boat.

Right now, mobile paid search is very much like desktop search in the early days. There’s less competition and cost than on the PC. However marketers must expand their definitions of “ROI” and track a much broader range of activities to get true visibility on the efficacy of mobile paid search.

About The Author

Greg Sterling is a Contributing Editor at Search Engine Land. He writes a personal blog, Screenwerk, about connecting the dots between digital media and real-world consumer behavior. He is also VP of Strategy and Insights for the Local Search Association. Follow him on Twitter or find him at Google+.